Net neutrality risk to online video

16 January 2014

WASHINGTON: Online video sites are digesting the implications of a US appeals court ruling which potentially signals the end of net neutrality.

By dismissing Federal Communications Commission rules, adopted in 2010, which required broadband companies to treat all internet data equally, the court opened the way for internet service providers to charge higher fees to companies like Netflix and YouTube, which together account for half the data flowing to internet users on North American broadband networks.

Consumers could therefore face the possibility of a tiered internet service, where their user experience is dependent on whether website owners agree to pay a premium to ensure fast content delivery. They could also face increased charges from those same owners.

Sites such as YouTube could also adjust the way they sell advertising to compensate for any revenue shortfalls.

"It takes the Internet into completely uncharted territory," Tim Wu, a Columbia University law professor who coined the term net neutrality, told the Wall Street Journal.

And Tony Wible, an analyst at Janney Capital Markets, said usage-based billing, for content providers or consumers, was inevitable to meet some of the costs of the infrastructure required to carry future volumes of data traffic.

The ruling comes hard on the heels of a separate intervention into this territory by AT&T which announced a "Sponsored Data" service, which would see app makers and websites paying for the bandwidth that consumers used when accessing their services.

CNET reported that an early partner was the mobile advertising provider Aquto which planned to use the service to entice customers to watch ads, including longer product commercials, without any data penalties.

AT&T rejected criticism that Sponsored Data violated net neutrality rules, arguing that any payment for data was offered by the company involved, not AT&T, a distinction that may in any case now have been superseded by the court ruling.